6 tips for better collaboration with trading partners

by | May 9, 2017

Our recent benchmark report, Retail Insight: Moving Beyond Omnichannel, found some interesting results inside some of the data we gathered as we looked at viewpoints toward growth, omnichannel retail and future consumer shopping expectations.

Collaboration is key to success

Some data points that really caught our eye revolved around the issues of trade partner collaboration and data sharing. At SPS Commerce, we encourage our retailers and suppliers to share data with each other whenever possible, because it can help both parties with inventory visibility, drop ship fulfillment and moving more product, more easily. As our CMO Peter Zaballos said in an interview a few weeks ago, retailers have more knowledge of the categories, while suppliers have more knowledge of their product, and when the information is shared between the two parties, great strides can be made towards identifying the consumer target markets.

That said, too many retailers shy away from sharing information with their suppliers. As more and more vendors have begun selling directly to consumers, some retailers are afraid of sharing their data with “the competition”. This sentiment is confirmed by a recent Promotion Optimization Institute (POI) survey that showed “Retailers, as evaluated by manufacturers, have declined in key collaborative measures: data quality, data access, and store access.”

More insights with collaboration

But retailers and vendors aren’t necessarily competing with each other, they’re two separate channels in a retail ecosystem where omnichannel reach is the expectation. Even with a robust direct channel, wholesale and retail sales are still very important for suppliers and vendors as the ultimate goal of an omnichannel strategy is to reach the greatest number of consumers with the best possible experience. Not many brands will be successful in the new world of retailing by retreating solely to their own direct channel.

According to our survey, many retailers, suppliers and especially manufacturers already know that better collaboration with trade partners is needed in order to deliver on consumer expectations. The retailers who are already collaborating with suppliers, and vice versa, have a leg up on the competition, as they have access to the information they need to reach the right consumers. The retailers (and suppliers) who aren’t communicating the right information could be missing out on opportunities they can’t see.

Tips for collaborating

So how can retailers, suppliers and manufacturers better collaborate and reap the benefits of improved trading partner relationships? Here are the top priorities we found in our survey.

  1. Inventory visibility across the supply chain. Suppliers and manufacturers should provide visibility of their inventory data so retailers can tell how much product is available and where it is within the supply chain. This helps both suppliers and retailers identify when they could be running low on inventory so the situation can be addressed before stock outs occur. Consumer expectations are better met when retailers and suppliers have inventory visibility down the supply chain.
  2. Make sure that item attributes are complete and fully optimized. That way, it’s easier for retailers to put the product information on their websites so customers can find what they’re looking for and know exactly what to expect. Consumers are far less likely to purchase an item online if there isn’t enough information in the product description. Additionally, if a shopper purchases a product and the description doesn’t match the item that arrives, they are far less likely to buy from you again. The item information should be as accurate and thorough as possible.
  3. Identify trends by sharing sell through data. Many factors can impact the popularity of an item. Analyze sell-through data so you know where products are selling (and where they’re not), whether sales are happening online or in the store, and even identifying which regions are performing better. Additionally, sell through data can identify other issues along the way. For example, one of our clients had a product that was selling great at every store in a particular region except for one location, which hadn’t sold a single unit. Turns out that the product was stashed in the warehouse instead of out on the floor, and once the items were on the shelf, the sales performance was comparable to the other stores.
  4. Partner up on product promotion strategy. Amazon and Walmart are in a race to rock-bottom prices. While retailers and suppliers may not be interested in reducing their prices, consumers are increasingly unwilling to pay full price – for anything. Increasing product promotions can be a good strategy for getting people to buy, whether it’s special offers, bonus items, or even rebates. Of course, collaboration is essential for retailers and suppliers to ensure that the promotions are still profitable for the parties involved.
  5. Get everyone on the same page for drop shipping. Plan and negotiate your drop shipping plan – what will be the retailer responsibilities, what the supplier’s part is to play, whether or not a 3PL will be included. When consumers place orders online, the appropriate details should be shared with each partner (there’s that collaboration again) in order to get the items to the customer in a timely fashion. And again, maintain visibility on inventory to avoid stockouts and delivery delays.
  6. Comply with necessary trading requirements. Confirm that all the documentation is up to spec for each trading partner. Regularly perform reviews to ensure trading partners in the relationship are paying prices that are expected, item attributes are correct, deliveries are successful and inventory is consistently stocked. This is where an EDI system can make all those things easier to figure out, and even automate parts of the process.

One interesting outlier we noticed is the relatively low priority for drop ship fulfillment. Retailers place a high priority on the capability, but it showed up fifth on a list of areas of alignment. However, despite this unusual placing, drop ship is growing. We’re at the point now where 51% of all retail sales are made online to be delivered to a person’s house, so that drop ship collaboration is going to be very important in the future.

Today’s consumers are fickle and delivering a good customer experience, both online and in the store, is vital to retail success. Achieving that success can be highly dependent on having a well-tuned supply chain, and collaboration is the key to making that happen. If retailers and vendors (and manufacturers and 3PLs) can nurture their relationships, share data, make plans together and pursue other collaborative efforts, all of the trading partners in the supply chain stand to gain some opportunities. Between consumers getting what they want, retailers selling them what they want and vendors maintaining a steady flow of what they want, collaboration is a win-win-win situation.

To learn more about how suppliers and retailers can share sales and inventory data, and collaborate on promotions, delivery, and drop shipping, please visit the SPS Commerce website for more information. You can also ask speak to an SPS representative about what you hope to achieve.

Ready to experience infinite retail power?

Ready to experience infinite retail power?

Learn how SPS solutions support retail and enable a more agile supply chain or contact SPS today for a consultation.

Rob Wilson

Rob Wilson

Sr. Strategic Alliances Manager at SPS Commerce
For more than 20 years, Rob has been an agent for change with a proven track record of unearthing and implementing new business solutions. As a trusted advisor to executives, he helps drive joint go-to-market initiatives that lead to tangible results. Rob has built an impressive record of fostering win-win opportunities with customers and partners through his product management, marketing and sales roles.

Rob graduated from the University of Minnesota, Carlson School of Management with a Finance MBA, Beta Gamma Sigma Honors, and an undergraduate BS degree in Marketing, Minor in Economics.
Rob Wilson

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